On Wednesday, BofA Securities adjusted its outlook on XPO Logistics , Inc. (NYSE: NYSE:XPO), reducing the price target from $175.00 to $171.00 while keeping a Buy rating on the stock. The stock, currently trading near its 52-week high of $156.85, has delivered impressive returns of over 75% year-to-date. According to InvestingPro analysis, XPO appears overvalued at current levels, though analyst targets range from $85 to $179.
The revision follows XPO's mid-fourth-quarter update for its Less-than-Truckload (LTL) segment, which showed a decrease in November Tons/Day by 4.0% year-over-year, an improvement from the 8.0% drop observed in October.
The combined tonnage average for October and November was down 6.0% on a year-over-year basis, which is slightly better than BofA's previous estimate for the fourth quarter of 2024, now adjusted to a 6.1% decline from the earlier forecast of 6.9%. XPO noted that the November slowdown was primarily due to a 4.2% reduction in Shipments/Day, a lesser decrease compared to October's 6.5% fall, and a nearly stable LTL Weight/Shipment, which saw a minor increase of 0.2% from a 1.6% decrease the previous month.
XPO is expecting the usual November to December seasonality to result in a mid-single-digit year-over-year decrease in December tons/day, aligning with BofA's prediction of a 6.5% drop. This is anticipated to contribute to a mid-single-digit decline in tons/day for the entire fourth quarter of 2024, which BofA estimates at 6.1%, revised from their initial forecast of 6.9%. For the quarter-to-date, Shipments/day have averaged a 5.4% year-over-year decline, matching BofA's fourth-quarter projection, while Weight/shipment has decreased by 0.7%, closely following BofA's forecast of a 0.8% drop.
While XPO has not provided mid-quarter yield figures, the company indicated that the pricing environment remains favorable. XPO also reiterated its expectation for sequential improvements in Revenue per hundredweight and Revenue per shipment (excluding fuel) for the fourth quarter, attributing these anticipated gains to company-specific initiatives.
With revenue growth forecast at 4% and a P/E ratio of 48x, investors seeking deeper insights can access comprehensive financial analysis and 15+ additional ProTips through InvestingPro, including detailed metrics on XPO's profitability and growth potential.
In other recent news, XPO Logistics has been in the spotlight following its impressive third-quarter earnings results. The company's revenue rose to $2.1 billion, marking a 4% increase year-over-year, with adjusted EBITDA seeing a 20% rise to $333 million. The adjusted diluted EPS climbed by 16% to $1.02, surpassing analyst expectations.
Analysts from JP Morgan, Goldman Sachs, BofA Securities, BMO Capital, and TD Cowen have subsequently raised their price targets for XPO, maintaining positive ratings. The upgrades follow XPO's strong performance in its Less-than-Truckload (LTL) operations, with notable improvements in service, yield, and productivity.
Despite a challenging market, XPO Logistics is projecting interest expenses between $225 million and $230 million, and an adjusted effective tax rate of 24%-25% for the full year 2024. These recent developments underscore XPO Logistics' resilience and robust financial performance amidst industry challenges.
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